Watercolor effect

I have just got hold of Donnie Darko 720p, it plays fine on my PC using VLC, but with my Sony Bravia KDL40-503, on movements, it looks like its blurring, you could say it looks like a moving watercolor image. Impossible to watch, what could this be? I've also noticed after shutting down the movie on the TV, ffmpeg runs for a little while after. I guess it's an issue in the transcoding? The movie is an .mkv btw.

edit: Added mediainfo.

[Illico]

Probably due to x264 encoding settings used.
You may re-encode the original with others standard setting